Yesterday, I got a strange piece of mail from my mortgage company. It wasn’t a bill, and it wasn’t a notice about a late payment. I wasn’t a cancellation notice, or anything related to my mortgage. Instead, it was information about a life insurance policy that I can buy from my mortgage company. That was unexpected!
For most people, it is a very good idea to have life insurance. A good life insurance policy will provide your spouse and children with the financial assistance that they would need in order to continue living their lifestyle after you have passed away. Life insurance can pay off the remaining balance on your mortgage. It can pay for funeral costs, and some of the medical bills that your health insurance plan didn’t pay for. These are just a few of the benefits of a life insurance policy.
Life insurance is much easier to get approved for than health insurance is. This probably says a lot about the insurance industry. Most people can get a life insurance policy from the company that they already have auto insurance or homeowners insurance from.
I was not expecting my mortgage company to try and sell me a life insurance policy. The information I got in the mail says that their life insurance policy will pay off your outstanding mortgage balance up to $300,000 in the event of your death. The fine print, however, tells a different story.
You can add a first applicant and a joint applicant to their life insurance policy. However, the policy will only pay out for one of the two policyholders if they both die at the same time. The fine print also says that the life insurance policy will automatically terminate when the insured person turns 75 years old. In other words, there is a good chance that you will outlive this life insurance policy.
This life insurance plan is only offered to people who are age 18 through 69. It will be “conveniently billed” to my monthly mortgage payment. My husband and I already have life insurance policies. Ours will not expire when we turn 75 years old. We are not interested in applying for this unexpected offer of a life insurance policy from our mortgage company. To me, it sounds like we would be paying extra money to our mortgage company and not actually getting anything in return.
Image by Nim Ron Roy on Flickr